President's Message 3rd Quarter 2016

As we experienced together in St. Paul at the recent IDEA Annual Con­ference and Trade Show, the district energy industry is actively engaged in change and seeking to acceler­ate the shift toward more distributed energy solutions for cities, communities and campus­es. With over 800 people in attendance from 19 countries, the theme for the 2016 confer­ence, “Embracing Change,” proved appropriate from the opening plenary panel to the techni­cal sessions throughout the three-day event. From shifting attitudes among investor-owned electric utilities to increasing interest among mayors seeking resilience, district energy sys­tems are being recognized as a proven, scal­able approach for multiple buildings, commu­nities and campuses.

As part of a larger strategy to advance regu­latory evolution and inform policy makers, IDEA has integrated the Microgrid Resources Coali­tion into our organization. We plan to expand membership in the MRC, integrate more mi­crogrid content into our conferences and work­shops, and generate additional revenues that will enable more robust education and advoca­cy on district energy/CHP microgrids. Over the past two years, the MRC has submitted written comments and briefs to various agencies and multiple jurisdictions, from the Supreme Court to FERC to various state and local commissions. As a result, the MRC has been recognized as an informed and respected resource. As I stated at the conference, the utility industry is in the midst of evolution where the rules and regula­tory regimes are shifting much like wet cement in a newly poured sidewalk, and we need to put our initials and handprints in it before the rules for the future utility model harden and are set.

I want to urge IDEA members to join the MRC and support more engaged advocacy in support of the paradigm shift. For organizations that are actively involved in microgrid develop­ment or sell products and services into this emerging market, membership in MRC will pro­vide you an active voice in setting priorities, se­lecting locations for engagement and allocating resources. One of the bigger challenges is deter­mining where opportunities are strongest and represent the biggest potential regulatory gain. The MRC has actively engaged in New York, Cali­fornia, Maryland and the District of Columbia. In the months ahead, the MRC will undertake ad­vocacy and a series of technology reviews to help potential partners understand the opera­tional advantages of microgrids within the re­gional and national electricity grids. It is vitally important that experienced industry leaders ac­tually lead, and now is the time to insert our per­spective into the dialogue and ensure that our voice is heard.

Concurrent with the MRC integration, IDEA has been involved with the Edison Electric In­stitute as part of our earlier memorandum of understanding along with the CHP Association. Recently, the parties have drafted a set of prin­ciples to serve as guidance for dialogue with regulators and agencies. Reaching consensus on a final version of the principles has proven more challenging and elusive than originally anticipat­ed. As we go to print with this column, we are re­viewing a recent set of edits from EEI that have substantially watered down the document and may impact our continued participation in the U.S. CHP Collaborative. It is pretty clear that the electric utility industry is experiencing profound change, driven largely by customers seeking more resilient and cleaner technologies such as CHP microgrids for mission-critical applications. IDEA believes we can assist EEI with greater in­sight into customer motivations, enhanced un­derstanding of proven technologies, and sharing of market opportunities for utilities to invest in the district energy/CHP sector. I remain optimis­tic that the U.S. CHP Collaborative has potential and thus merits our continued effort, but the path ahead is not clear.

One area of activity that is picking up steam is the United Nations Environment Pro­gramme’s District Energy in Cities initiative, which IDEA has supported from its inception in 2014. We were pleased to welcome Lily Riahi from UNEP in Paris to recognize the city of St. Paul as a Champion City and to present a plaque to Mayor Chris Coleman before his cutting of the ribbon to open the IDEA An­nual Trade Show. Mayor Coleman was one of the 400-plus mayors at Paris City Hall during the COP21 international gathering. He commented on the importance of ac­tion by mayors in the effort to mitigate the impacts of climate change and how he is proud for St. Paul to be recognized as hav­ing a world-class district energy system. District energy is obviously a local invest­ment that involves local leadership and is often more successful with a mayor as champion.

What is becoming increasingly apparent is the growing interest among cities in deploying district energy as a proven solution and the need for more in­dustry capacity to support investment in new district energy systems along with modernizing and expanding existing sys­tems. This also is an important area for IDEA members to engage and provide leadership so that our experience is brought to bear and development oppor­tunities are not delayed or devalued by unmet or unrealistic expectations. Launch­ing a new district energy system in a com­munity is a complex challenge, much like navigating a raft down a rushing river strewn with boulders and eddies. You need to know when to paddle through the turbulence to avoid the bumps and holes, and an experienced guide can make the trip smoother and safer.

Looking ahead, it seems like the river of regulatory change will continue to pick up speed. It feels generally like the flow is moving downstream in a favorable direc­tion for our sector, away from large central station electricity generation to more dis­tributed and cleaner assets. We are no longer paddling upstream against the cur­rent, but that doesn’t mean we can rest on our laurels and just drift along. There will be some swift white water that requires our best efforts to stay afloat. There will be flat spots that require more of us to paddle to move downstream. Along the way, we may have alignment with other sectors that allow us to tie off and form a flotilla. And there are certain to be times where we have to paddle our own boat and differentiate district energy/CHP/mi­crogrids for the unique characteristics we provide. To me it is pretty clear that the energy world – and the utility industry across North America in particular – is in a period of robust, rapid change. It is sure to be an exciting ride.